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EFTPOS fees

Reserve Bank consultation on card fees

Following the federal government’s announcement about debit card fees, the reserve bank today announced details of its consultation on card fees. The issues paper provides good background on the move:

The Reserve Bank of Australia (RBA) is conducting a review of merchants’ card payment costs and surcharging. Australians use cards extensively to pay for goods and services and benefit from the convenience and security provided by card payments. However, in an environment of heightened concern around the cost of living and ongoing changes in payment preferences, merchants and consumers are increasingly focused on card payment costs and surcharging. These two issues are linked as merchants would be less likely to surcharge consumers if card payment costs were lower. Accordingly, it is timely to review whether the RBA could do more to put downward pressure on merchant card payment costs by promoting competition and efficiency and whether the RBA’s surcharging framework remains fit for purpose. This review also recognises that some years have now passed since the surcharging framework was introduced.

Retailers have an opportunity here to have their say in relation to payments. Take your time to read the issues paper and understand the extent of this first phase of a bigger project.

The RBA is seeking views from interested stakeholders on the issues raised in this paper. Written submissions on the issues discussed in Section 2 should be provided by 3 December 2024 to: pysubmissions@rba.gov.au

This is a hot topic for retailers and consumers. Having your say puts you into the conversation.

While associations, groups and other collectives will lodge submissions, my experience with government enquiries is that they appreciate hearing from individuals, or in this case, individual businesses.

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Seven news: How the rise of ‘tap and go’ payments is hurting small businesses

Great to see mainstream media shine a light on this story about the soft of tap and go:

How the rise of ‘tap and go’ payments is hurting small businesses

Published: 08/12/2021Updated: Wednesday, 8 December 2021 3:04 PM AEDT

The rise of “tap and go” has seen grocery and fuel sellers slugged with higher transaction costs they can no longer absorb, a small business summit has been told.
Consumers don’t know that buying a coffee with a mobile phone might be making it harder for their favourite cafe or servo to remain in business because of steep transaction costs.

“Transaction costs are accelerating more than any other,” Mark McKenzie, chief executive of the Australasian Convenience and Petroleum Marketers Association said on Wednesday.

Merchants’ fee costs have become an essential service, on a par with electricity bills in their impact on a business, as leaps in technology run ahead of legacy banking systems, he told the Council of Small Business Organisations Australia (COSBOA) payments summit.

Ben Kearney, head of the Australian Lottery and Newsagents Association, said there had been a massive increase in contactless payments, particularly during the pandemic.
“It has become an enormous issue for our members because of cost,” he said. He said a $10 lottery ticket brings a $1 commission but then a 10 cent transaction fee would erase 10 per cent of that commission.

Payments expert Robbie MacDiarmid said $67 million per month in excessive fees was being paid by small businesses due to routing of payments.

COSBOA members want every transaction to be processed on a “least cost route”, including from digital wallets and phones, despite legacy issues for banks.

However, head of payments policy at the Reserve Bank of Australia Tony Richards said small merchants have low transaction costs by international standards. “Payment costs in Australia are much lower than in the United States,” he said. Dr Richards was not aware of any market where least cost routing was compulsory but he acknowledged treatment of payments made with digital wallets needed work.

He said least cost routing in mobile payments was not common and it would involve retrofitting payment systems and overriding consumer choice. ‘In some cases they’re just trying desperately to keep their head above water’ But Mr McKenzie says merchants are the customer of the service yet the supplier is making the decision about how they get that service, and that is innately wrong.

Meanwhile, COSBOA chief executive Alexi Boyd said business owners often didn’t know they were being slugged the maximum amount.

Nor would a consumer know that paying through a digital wallet like Apple Pay or Google Pay or doing a “tap and go” payment with their phone meant the transaction attracts fees were up to six times greater, she said.

I urge you to read the full story, and to share it on social media.

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Small business retailers on the mixed messages about the future of cash in Australia

Aussie media outlets are reporting that the future of cash is challenged in Australia following the surge in cashless transactions. These stories were strong early in this corona world and then they landed away. This week, the cashless stories have bounced back with several media outlets reporting on this. Here are some of the stories:

Small business retailers talk of mixed messages about cashless. Many talk of customers who are happy with cashless, prefer cashless but who demand cash when people paid a lottery prize. In several cases told to me this week, the same customers who preferred to pay using a card were angry when told that a business didn’t have the hundreds of dollars for lottery prizes because they had not gone to the bank to get more cash.

The challenge is that cash in provided lottery retailers with a cash float for prize payouts. Today, plenty of lottery retailers are having to go to the bank to withdraw cash to cover small prizes. This situation is worse when a lottery game jackpots and the prize passes $20M. The higher the prize the higher the draw on cash for small prize payouts.

Tabcorp is being no help here. The company appears disinterested in supporting small business retailers with a refund to card option being available where a business does not have the cash.

With bank branches closing in plenty of smaller regional towns, the cost of having cash for lottery payouts in this world were is used less is problematic for some lottery retailers.

The disconnect between some businesses and among some considers about cashless makes it a topic worthy of deeper analysis. I think too many news reports on this topic so far this year have been shallow. A deeper dive is needed and along the way companies like Tabcorp need to engage as they have not, so far on this, been small business retailer friendly.

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Tyro campaigning to cut interchange fees

As more than 1,000 newsagents use Tyro for Eftpos processing, I encourage you to look at the campaign being run by Tyro to lobby the Reserve bank to act on interchange fees. There is a quick survey you can take in support of the campaign. here is the heart of their pitch:

Interchange fees on credit and debit transactions are up to 10 times higher for SMEs then they are for big retailers. It’s just not fair.

Without interchange fees, Tyro estimates Australian businesses would be better off by around $300 million annually. That could mean thousands of dollars in savings back to your business each year, plus a more level playing field for the engine of Australia’s economy.

I support the Tyro campaign.

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Take care comparing EFTPOS contracts

If you are called by a bank or another party to take on their EFTPOS service, take your time to research and compare the offer.

Ensure the fees are competitive, that there are no hidden extras and that any contract they want you to sign is for a period of time you are prepared to accept.

One contract I have just seen required the newsagent to sign up for three years, agree to an onerous contract break fee and accept any fee rise the bank may impose in that time.

A low EFTPOS fee deal you are offered today could be gone quickly, leaving the newsagent locked into an uncompetitive deal.

Those promoting an EFTPOS deal to newsagents ought to ensure that their deal stacks up as being good for newsagents. If any industry association promotes, endorses or otherwise guides newsagents to a specific deal they are effectively placing their stamp of approval on the deal. They need to disclose the due diligence undertaken and any commercial benefit for them they may receive.

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PC-Eftpos under fire in Myer Christmas Eve outage

pc-eftposThe Australian Financial Review yesterday reported on a Christmas Eve It outage for the Myer department store. The AFR report points to issues related to PC-EFTPOS. This is a bridge commonly used when connecting POS software to a bank.

With many hundreds of newsagents using Tyro it’s worth noting that PC-EFTPOS is a competitor (with banks) to Tyro. Typically newsagents with an integrated Suncorp or St George or similar bank issued terminal will connect through PC-EFTPOS.

Myer competitors not affected by the outage benefited.

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Tap and go under fire for easing theft

The tap and go payment method came under fire yesterday morning on Melbourne radio with plenty of people complaining about cards being stolen and them being used quickly to rack up many quick purchases. The thrust of the complaints by consumers was that these tap and go cards made theft easier.

One retailer who called in complained about the cost to retailers of cards. The example they gave was excellent, showing the high cost of the platinum cards on business.

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New Visa card surcharge rules come into force today

New rules come into force today on the application of surcharges for processing payments made by a card. The RBA website has background to the creation of rules relating to surcharge here. It’s worth newsagents checking out the Visa press release here. Visa’s new rules apply from today.

It’s also worth reading what change.org is saying and doing about this in terms of Jetstar.

Newsagents who apply a surcharge to any card payment transaction need to look carefully at how they calculate and apply the surcharge.

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Tyro beats bank EFTPOS at the counter

While the Commonwealth Bank has been spending up big promoting fast settlement of EFTPOS transactions for retailers, they have done nothing speed up transactions at the counter from what I can see. A colleague waited two minutes last week for a Comm. Bank EFTPOS unit to dial, connect and approve a transaction. Shoppers leave when such delays occur at busy times. I know from my own experience in my own newsagencies in this very busy Christmas period that I can process an EFTPOS transaction on Tyro in seconds. Ne delays for customers, no delays for me. This helps me make more money. The Comm. bank advertising is useless unless they find their throughput bottleneck. Tyro links to newsagency software systems.

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Tyro offers newsagents a more secure solution

A story from BankingDay, a banking industry publication, highlights the importance of security and helps underscore the value of the tyro broadband EFTPOS solution for newsagents.

Tyro has have created a technically better and more secure solution that protects the merchant (the newsagent) from the sort of compromises that out of date banking technology all too often can expose them (you) to.  Tyro security is validated with an independently assessed PCI-PA DSS certification. this is important.

Here is the start of the BankingDay story:

Romanian scam forced thousands to fix systems
07 December 2012 7:00am

The alleged A$30 million Romanian credit card scam caused possibly the largest remediation effort ever undertaken within the Australian consumer payments system in the 18 months before last week’s arrest of the scammers.

Only 46 stores were confirmed to have been hacked in the scam last week, at a cost estimated at $30 million.

But industry sources have told Banking Day that thousands of merchants were required to have their systems “remediated” in the months after the scam came to light in June 2011, to fix their vulnerability. The remediations needed included changes to software, hardware and network configurations needed to prevent access to customer data.

Many of the stores affected were franchisees of Metcash’s IGA grocery chain, sources confirmed. A spate of mid-2011 media reports described unsolved fraud outbreaks centred on IGA stores from as far afield as the Melbourne suburb of Warrandyte to regional Victorian towns like Horsham and Castlemaine and NSW regional towns such as Orange and Junee.

The victims of the Warrandyte fraud wave, which was centred on the Warrandyte SUPA IGA store, reportedly included two police officers.

At publication time, it remains unclear whether sanctions will be applied to anyone in the chain of parties that allowed the system vulnerabilities to be created and to continue for several years.

The scam was enabled by poor store decisions about hardware, software and IT service providers that may have been influenced both by franchisors such as IGA and by the acquiring banks. A Mastercard spokesperson told Banking Day that the acquiring banks were responsible for ensuring that their merchants complied with the industry data security standard, PCI DSS.

Read the rest of the story here.

This is important because not all EFTPOS solutions are equal when it comes to security.

Newsagents wanting to know more about EFTPOS security and Tyro should speak with Chris Ball on 02 8907 1748. Tyro works with a range of newsagency software systems.

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The Threat of Real Distortions in the EFTPOS Market

Tyro, the EFTPOS partner for many hundreds of newsagents, today issued a press release relating to their submission to the RBA on EFTPOS. It starts with…

Australia’s four major banks and Woolworths and Coles will potentially be the big beneficiaries if a new regulation of the EFTPOS payments system is allowed to proceed, the country’s only independent EFTPOS provider warned today.

Under the proposals, the major banks and retailers will be allowed to negotiate special deals for themselves, while charging small and medium sized retailers higher fees if they wish.

This is because the big four banks and Woolworths and Coles through their ownership in eftpos Payment Australia Limited (ePAL) are being given the freedom to just do that.

Click here to see the press release and read more about the Tyro position on behalf of their small business customers. The Tyro fight is important to newsagents.

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Welcome moves by RBA on EFTPOS fees

I was pleased to see the announcement from the Reserve Bank yesterday banning excessive EFTPOS related fees. While the regulation is not as simple as it should be, it is a start.  My concern is that it is open to interpretation and you need to complain for an issue to be resolved.

The RBA also announced a process of consultation on the future regulatory framework of EFTPOS Hopefully plenty of small business representatives make submissions, particularly around the control the big banks in Australia have over current arrangements.  You can access a paper outlining the thinking of the RBA on the future framework here.

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If you bank with ANZ…

A few weeks ago the ANZ Bank whacked retailers, including newsagents, with an increase in EFTPOS fees. Last week they increased small business loan rates as well as home loan rates. Along they way they have continued to charge hefty fees at every opportunity from overdrafts to account fees.

Newsagents who want to reduce the fees they pay to the ANZ could consider switching to Tyro broadband EFTPOS. My own Tower Systems newsagency software and the pos solutions software both link to Tyro. It’s faster than a bank terminal, more accurate, easier to reconcile and often has lower costs.

Chris Ball from Tyro can provide pricing comparisons on 02 8907 1748.

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Setting the record straight

This is what Bernard Zimmermann, Director of POS Solutions published at his company blog today:

After what happened last week where many of my clients got cut off EFTpos. It is a concerning when now EFTpos is between 25% to 100% of a retailers’ income, there were two major outages once with Westpac last Tuesday and almost everyone down on Thursday. This week CBA went down on Monday morning. That is three major outages in less then a week.

I do not think it is fair. Many retailers are paying extra to do their EFTpos with the majors and they should be getting reliable service.

Anyway we got concerned so I decided to ask Tyro about their record.

This is their response.

Dear Bernard,

100% availability and PCI PA-DSS certified

I hope you are doing well. It is absolutely amazing to see the escalating numbers of EFTPOS outages, glitches and failures that major retail banks deliver and the disruptions it causes to businesses and consumers. It is not rocket science, but only requires an investment into innovation and infrastructure to make the payment system resilient.

Bernard goes on to republish the full email from Jost Stollmann, CEO of broadband EFTPOS provider Tyro.

The correspondence Bernard quotes was sent by Tyro to all their software partners.  I confirmed this with Tyro.  I and several colleagues at Tower Systems received the email from Jost.  It was not sent in response to a request from POS Solutions.

I felt it important to share this and set the record straight.

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St George bank cares less about newsagents

Just a few years ago St George Bank was crowing about deals for newsagents in a push to win over newsagents for EFTPOS processing.  Now, the bank is rewarding loyalty by increasing fees to newsagents.  Some EFTPOS related fees have increased 100%.  I am not away of any increase in costs to St George which would require a 100% increase in fees they charge to their customers.

Newsagents I have spoken with are voting with their feet, taking their EFTPOS business elsewhere.

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The challenge of higher EFTPOS fees for retailers

I am grateful to Hank Spier for chasing the following notes with me on the issue of the EFTPOS fee increase engineered y ePAL, the body controlled by the major banks plus Coles and Woolworths.

In February 2011 EPAL announced a new multilateral interchange fee regime to replace the existing bilateral arrangements. EPAL is made up of the banks and Coles and Woolworths. EPAL’s reasons for the changes is to get additional moneys for technology upgrade of the Eftpos network.

For those members of EPAL which opt into the new multilateral interchange fee model, the following fees will apply to the banks involved in an Eftpos transaction,

  • for all purchases of less than $15 (where no cash is withdrawn) there will be no interchange fee.
  • for all purchases of $15 and over, there is a fee of $0.05;
  • for each cash withdrawal (whether combined with a purchase or not) there will be a fee of $0.15.

The effect of the new regime is where there is a purchase of $15 or more, combined with a cash withdrawal there will be a fee of 10 cents.  To add to the cost impact fees of 4-5 cents rebate previously paid to the merchant’s bank has been abolished.

Normally such agreement between competitors will be subject to ACCC scrutiny but in this case the ACCC has not jurisdiction as the Reserve Bank has the regulatory role. The RBA has been generally supportive of the fee changes. The Federal Government has refused to get involved despite requests from small business.

There was much opposition to the changes from small business especially from the AHA and newsagents associations. ALDI took EPAL to the Federal Court alleging misleading conduct, namely that EPAL had been saying that it is unlikely that consumers would pay any more. The emerging facts were very different. ALDI won on 29 September. EPAL will have to place corrective advertisements in the national press. The AHA and newsagents associations assisted in the ALDI action.

The new fee regime came into effect on 1 October. It is up to individual banks what they do in relation to passing on costs to retailers. As a result of the opposition and the ALDI case two banks have backed off, the CBA has promised not to pass on the increased costs to retailers and NAB will limit the costs to be passed onto small businesses. St George has said that it will pass on increased costs.

Where banks do charge it is up to business to assess whether or not they pass on the costs to consumers, if they can.

Where the banks do pass on costs I suggest that,

  • business approach their bank to see if something can be done about the increase,
  • Trade associations look at collectively bargaining with those banks on behalf of businesses affected.

The individual fee increase involved is not high but will add up in high transaction volume businesses

While some banks have said that they will not increase fees, I don’t see this as their long term position.  They are banks after all.

I’d encourage newsagents to take Hank’s advice.

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ASIC, the reserve bank and the federal government failed Australians on EFTPOS issue

Where is the federal government on the EFTPOS fees issue?  Nowhere.

Where is ASIC on the issue?  Nowhere.  I would have thought that ASIC could pursue ePAL for misleading conduct.  The still could I guess.  Will they?  Probably not.

Where is the Reserve Bank, the organisation which created the situation? Nowhere.

The federal government – especially Nick Sherry Small Business Minister and Wayne Swan Treasurer – has let retailers down.  They have ignored us.  When we wrote, they replied with noise and no substance.

The opposition was a little better but not much.

No, it was up to Aldi, a foreign owned supermarket group to fight the fight which government or its agencies ought to have taken on … representing small business retailers like newsagents.

Thanks to the Aldi action we now have some banks retreating and saying they will not increase fees for now.  We need to keep this pressure on … on the banks, on ePAL and on the politicians.

Who thought that putting the big banks plus Coles and Woolworths in charge of managing EFTPOS and setting fees was a good idea?

If Nick Sherry really cares about small business he would engage on this issue and actually do something.  Instead he spends his time making speeches telling retailers what he thinks they are doing wrong.

The Opposition would garner significant small business support if they came up with  an alternative plan on the issue of EFTPOS fees.  Rather than trying to kill the government, they could show alternative leadership on this issue.  It’s ripe for them to make a move and show that they can create positive plans.

All in all retailers have been let down by everyone except for the work of Aldi.

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MasterCard blames retailers for fees

In a submission to the reserve bank, MasterCard says that some retailers are gouging on fees they charge shoppers for using their MasterCard.  The Australian has the story today.

While I am not concerned if the reserve Bank does introduce a cap on what we can charge for the use of a MasterCard or Visa card, it galls me that MasterCard takes a swipe at us without talking about they fees they charge retailers.

Losing margin is this tight retail marketplace is a cost any business would want to avoid.  MasterCard should look at what it charges retailers before pointing the finger at us in complaining to the Reserve Bank.  In addition to the margin cost of their fees, there is the administrative cost associated with accounting for this method of payment.

Maybe retailers could fight back with a sales counter based campaign against the MasterCard submission.

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ALDI challenges banks on EFTPOS fees

Aldi released a media announcement on Saturday keeping up pressure on the banks over EFTPOS fees. Here is the full announcement:

ALDI calls for proof that banks’ internal costs will increase due to changes to EFTPOS interchange model

ALDI is today calling for Australian banks to prove their net costs are increasing as a result of changes to EFTPOS interchange fees.

Steven Bigg, ALDI Managing Director Finance and Administration says ALDI believes the overall increase in net costs to the banking industry is minimal and is calling for greater transparency of any unjustified cost increase to retailers.

“Any investigation will show the banks will increase their revenue to the tune of tens of millions of dollars each year at the expense of retailers, if all the Major Banks adopt a similar stance to those banks that have already advised their retailers in writing as to the magnitude of the fee increase,” he says.

“We also see the potential for adverse effects on competition due to inconsistencies in how these charges are being applied to retailers, in what is already  acknowledged as one of the most concentrated grocery retail sectors in the world.

“In light of the Federal Court’s judgement that consumers and retailers have been misled, we believe the decision to change the interchange fee structure should be further reviewed in an open and transparent manner, and the changes placed on hold until this review has taken place.”

ALDI has now made a decision NOT to place any surcharge on EFTPOS transactions within its stores.

As I have noted already, it is terrific for small business retailers like newsagents to have Aldi making the running on this issue as they are more likely to get media coverage than us.

For the record, we will not be introducing EFTPOS fees in any of my newsagencies.  We use Tyro broadband Eftpos and appreciate their helpful position on the new fees.  This will help us keep our costs down.

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Aldi vs ePAL coverage

There has been considerable media coverage on the Aldi court case against ePAL over the last 24 hours.  Here is just some:  Inside retailing; The Australian; Smartoffice; ABC, AM on ABC radio and ABC news last night.

Also good to see the story in The Australian with news that the Commonwealth Bank will not be passing on fee increases at the moment.

Kudos to Aldi for their court action and in getting this topic onto the news desk.

Today, the world changed for Eftpos fees.  ePAL’s new pricing regime is in place and this means retailers like us could pay more.  Already some banks have made moves.  While we don’t know where it ends up, banks being banks I think that we have a fair idea what will happen.

I and some other newsagents are continuing to lobby politicians on this.  They have the ability to control ePAL through the Reserve Bank.  Unfortunately, all politicians appear to be prepared to do at the moment is to regurgitate ePAL spin on the Eftpos fee changes.  So much for their support for small business.

This is issue has been an excellent opportunity for politicians to put their words of support for small business into action.  We have been profoundly let down.

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Aldi versus ePAL judgement

Click here to see the full judgment delivered by Justice Jacobsen of the Federal Court in the case brought by Aldi against ePAL, the EFTPOS payment scheme operators.

While the judgment represents a comprehensive win for Aldi in their complaint against ePAL, it does not stop the unfair changes to the EFTPOS fee regime which takes effect from next month.

Click here to read the press release issued yesterday by Tyro payments, the little guy in the battle against domination by the big banks plus Coles and Woolworths of EFTPOS processing in Australia.

Newsagents can fight back on this issue by switching off their bank EFTPOS terminals and switching to Tyro.  Tyro has already made a n announcement favorable to newsagents on their handling of fees once the new EFTPOS regime kicks in.

Disclosure: Through Tower Systems I have a commercial agreement with Tyro for the support of their platform in Tower newsagencies.

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Aldi wins in case against EPAL

Judgment in the case brought by Aldi against EPAL around their communication regarding the likely impact of changes to EFTPOS fees has been handed down this morning in Aldi’s favour.  EPAL has been required to publish corrective communication.  Costs were awarded to Aldi.

While this does not address the impact of the new fees levied by EPAL (big banks plus Coles and Woolworths), it does require a more accurate statement on the impact of the EPAL decision to raise fees.

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Details on the Aldi claim against EPAL

Futher to my post yesterday, click here for a copy of the Statement of Claim lodged by Aldi in the Federal Court about EPAL behavior around EFTPOS fees and behaviour by banks at the same time.  Westpac and NAB have announced fee hikes on the back of the EPAL move.

Aldi’s case is that EPAL must have known about the bank’s plans, given that Westpac and NAB are part-owners of EPAL.

The Banking Day newsletter yesterday reported on this:

Counsel for Aldi claimed in a directions hearing yesterday that Westpac and National Australia Bank had notified their merchant customers that changes to Eftpos fees would result in higher charges – 10 cents per transaction in Westpac’s case.

Aldi’s contention is that the banks were telling retailers about their plans, which could result in significant charges being passed on from retailers to consumers, at the same time that EPAL issued its press release.

It’s not too late for newsagents to engage on this issue with their banks and local politicians.

Aldi would welcome hearing from any retailer with news of an increase in fees from their bank.  Please make email contact with Alex Richards here: alex.richards@aldi.com.au

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Aldi takes on EPAL over EFTPOS fees

Supermarket group Aldi has taken legal action against EPAL over its position regarding EFTPOS fees. The Aldi action centres on transparency of the EFTPOS changes being brought in by EPAL.  Click here for a copy of the Aldi media release on this matter.

Aldi would welcome hearing from any retailer with news of an increase in fees from their bank.  Please make email contact with Alex Richards here: alex.richards@aldi.com.au

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